UK Residential Paper

2023 To Rent or Own?


Updated October 2023

Executive Summary

The current state of the economy is having an impact on the UK housing market. The cost of servicing a mortgage has increased as a result of rising interest rates, in part driven by elevated inflation. The effect on the residential market in the UK is more pronounced due to its unique shorter-term and largely floating rate mortgage market, which requires more rapid refinancing as compared to most of Europe and the US. This has meant the financial benefits of renting could outweigh those of buying. Simply put, on average, renting is now cheaper than buying in the UK. This paper explores the affordability of renting versus owning and examines the implications for the UK rental market. Specifically, we expect renter demand to remain robust, with a structural shift towards renting by choice. Investment in the sector is supported by these demand drivers and tight supply.

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